U.S. group raises due process concern over China antitrust probes

By Michael Martina

4 Min Read

A man stands on an escalator in the financial district of Pudong in Shanghai November 20, 2013.Carlos Barria

BEIJING (Reuters) - Companies facing antitrust investigations in China are subject to a host of pressure tactics from regulators, a business lobby said on Wednesday, in the latest report to cite due process concerns over China's anti-monopoly enforcement.

China has ramped up the use of its 2008 Anti-Monopoly Law, prompting a string of complaints from foreign groups that foreign firms are being unfairly targeted by its three antitrust regulators.

The U.S.-China Business Council (USCBC) said companies that drew scrutiny from regulators had been pressured to "admit guilt", appear without legal counsel and make statements without being informed of the grounds for investigations.

"Such practices contradict both the letter and the spirit of China's efforts to promote rule of law and due process, and they are out of line with international best practices," the group said in a report.

Reuters reported last year that companies had been warned by tough-talking regulators not to use external lawyers during investigations.

The government rejects complaints about its three antitrust regulators and says investigations by the National Development and Reform Commission (NDRC), the Ministry of Commerce, and the State Administration for Industry and Commerce (SAIC) are conducted according to law.

A top regulatory official said China was not being unfair to foreign firms, the official Xinhua news agency reported.

"Some of the NDRC monopoly investigations involve overseas multinationals, but that does not mean that we are targeting them," Xu Kunlin, head of the anti-monopoly bureau under the NDRC, was quoted as saying.

"We treat local and overseas companies equally to ensure justice for all."

CONCERNED

The USCBC report follows a string of statements from the American Chamber of Commerce in China, the European Union Chamber of Commerce in China and the Washington-based U.S. Chamber of Commerce, expressing alarm about what they have called China's unfair use of competition policy.

The USCBC said 86 percent of respondents to a survey reported they were either somewhat, or very, concerned about China's anti-monopoly enforcement efforts.

Both Chinese and foreign companies had been investigated since the Anti-Monopoly Law came into effect, it said, but regulators' actions "in recent months" had focused more heavily on foreign businesses.

Foreign business advocates had initially been hesitant to publicly discuss concern over accusations of due process violations as investigations picked up in 2013.

But in an April letter to U.S. Secretary of State John Kerry and Treasury Secretary Jacob Lew, the U.S. Chamber of Commerce urged Washington to get tough with Beijing on its use of competition policy, which it said had been seized upon by China to advance its industrial agenda and nurture domestic companies.

The issue was raised at high-level strategic talks between the United States and China in July.

China is trying to restructure its economy so that growth is driven by consumption and antitrust agencies have said they will target industries where practices could lead to "unreasonably" high consumer prices.

Microsoft Corp (MSFT.O) and U.S. chipmaker Qualcomm Inc (QCOM.O) have been among dozens of companies scrutinized.

The National Development and Reform Commission said this year that Qualcomm was suspected of overcharging and abusing its market position in wireless communication standards, charges that could lead to fines of more than $1 billion.